China postpones imports of 600 thsd tonnes of wheat due to excess domestic stocks

China has postponed imports of up to 600 thousand tons of wheat, mostly of Australian origin, and offered some of these shipments to other buyers due to lower domestic demand. This was reported by two sources with direct knowledge of the situation, Reuters reported.

According to USDA, in MY 2023/24 China provided 6% of the world wheat imports. Reduction of its purchases may put pressure on the stock prices in Chicago, which now remain below $6 per bushel, after falling to four-year low of $5.14 in July.

China has sufficient stocks after a good corn and wheat harvest. In order to support local prices, which have fallen due to a surplus of grain, the country does not want to receive new wheat shipments before April, sources said.

One of the traders, who works in Singapore and has direct access to the deals for the sale of American and Australian wheat to Asia, said he knows about four postponed shipments of 240 thousand tons. Three of them are from Australia, one from Canada, and Chinese buyers are trying to resell them in Southeast Asia.

According to him, about 10 vessels from Australia and Canada have been postponed or resold, each carrying about 60 thousand tons of wheat.

“China has postponed the delivery of several batches of wheat that were to be shipped from Australia and Canada. The domestic market is overstocked, and local prices have fallen,” the trader said.

A source in a large Australian grain trading company confirmed that two wheat shipments scheduled for February were revised: one was postponed to April, the other is on the way, but part of its cargo is planned to be redirected to Thailand.

In total, China has postponed or rerouted 8-10 Australian shipments booked for January-February, and has not signed any contracts for March deliveries.

“China simply does not want to receive new wheat before April,” the source said.

COFCO, which has imported most of the delayed or diverted shipments, is covering the costs of keeping the grain in ports and possible financial losses from its resale.

“China is committed to protecting its farmers. After a good corn harvest, the country already has enough grain for feed needs, so now wheat is imported only for flour production,” said a trader in Australia.

State-owned Sinograin has announced that it is expanding its grain storage capacity in northeast China to increase purchases of domestic corn for the 2024 harvest.

Tags: Australia, China, wheat